The year has been a tough one so far for first home buyers trying to get into the property market, with asking prices headed for double digit growth in multiple capital city and regional markets around Australia.
If you are a single income loan applicant, it has been even tougher, so imagine being a single parent on top of that.
But there was good news in the recent federal budget announcement, with single income earners with dependents to be eligible to borrow to buy a home with only a 2% deposit.
So here’s what you need to know about the Family Home Guarantee.
Are you eligible?
From July 1, single income parents will be able to apply for a loan under the scheme. To do so, you will need to have a household income of under $125,000. After your 2% deposit, the government will guarantee up to a maximum of the remaining 18% of a regular 20% deposit usually required by lenders to avoid lenders mortgage insurance (LMI).
As a single parent with at least one dependent, you will need to demonstrate you are legally responsible for the day-to-day care, welfare and development of the child and that they are in your care. You must be the sole applicant on the form and intending to live in the home you purchase.
It doesn’t necessarily have to be your first home, but you won’t be eligible if you currently own a home already, including an investment property, commercial property or land holding.
Depending on existing custody arrangements, two separated parents of the same child may be eligible to apply in some cases.
What properties are eligible?
As with most government grants and concessions, there are limits around the values of the properties that apply to the scheme. These differ by state and territory, so it’s important to check what price caps apply to you.
NSW has the highest price caps, with $700,000 for an established property and $950,000 for a new build in the metro and major regional centres, and $450,000 (established) and $600,000 (new build) for the rest of the state.
VIC is next with $600,000 (established) and $850,000 (new) in major centres; and $375,000 (established) and $550,000 (new) in the rest of the state.
In QLD, it’s $475,000/$650,000 and $400,000/$500,000, while in WA, it’s $400,000/$550,000 and $300,000/$400,000.
In SA, it’s $400,000/$550,000 and $250,000/$400,000, while in TAS it’s $400,000/$550,000 and $300,000/$400,000.
In the ACT, it’s $500,000 for established and $600,000 for new properties all over the territory and in the Northern Territory $375,000 (established) and $550,000 (new).
Spaces are limited
Right now the government estimates 125,000 single parents who may be eligible. Around 80% of these are single mothers.
But not everyone who is eligible will get a look in, as the government plans to grant just 10,000 applications over the next four financial years.
How do I apply?
Applications will need to be made via one of 27 participating lenders across Australia, so check with a mortgage broker or potential lender before applying.
Applications will open on July 1 and the scheme is being administered by the National Housing Finance and Investment Corporation.
Still not sure if you qualify for assistance?
If you are unsure if you are eligible to apply for the Family Home Guarantee, or wish to know more about the other first home buyer grants or concessions you may have access to, please reach out to the team at Zinger Finance.
Our Mortgage Strategists can help you understand your options and make an informed choice moving forward.